Operators to Panel: Delaware Tax is the Problem

Operators told the study panel seeking ways to bail out Delaware’s casino industry that the industry’s problems go beyond competition from neighboring states.

Representatives of each of Delaware’s three racinos presented revenue and employment figures last week to the Delaware Lottery and Gaming Study Commission, the panel comprised of lawmakers and state officials seeking to find ways to revive the state industry’s revenues.

Operators testifying before the panel acknowledged that they have been hurt deeply by competition in neighboring Maryland, but insisted that competition, which has leveled off in its negative impact, is not the main barrier to future growth.

The main obstacle is state taxes of gaming revenues, they said.

Dover Downs officials urged the panel to revise the current revenue-sharing structure, which leaves the casinos less than 40 percent of their revenues after state and local taxes. “We’re already struggling,” said Dover Downs CEO Denis McGlynn, “so absent relief, leveling off at some future lower number just makes our situation worse.” He said Dover Downs has lost nearly $890,000 through the first six months of the year.

For the casinos to remain in business for the long term, operators told the panel—and to avoid layoffs—the state needs to take a smaller cut of revenues.

Last year, the panel’s recommendations included lowering the table-game revenue tax from 29.4 percent to 15 percent, and eliminations of the annual $3 million table games fee. The legislature ultimately rejected those recommendations, instead approving a straight $10 million in direct aid by moving money from state funds established to help business.